Project Selection Frameworks and Methodologies for Reducing Risks in Project Portfolio Management

Project Selection Frameworks and Methodologies for Reducing Risks in Project Portfolio Management

Fabio Nonino
DOI: 10.4018/978-1-5225-5481-3.ch026
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Extracting and consolidating knowledge from past projects can help managers in selecting projects with the correct level of riskiness, while market analysis gives directions for reaching the objective of a balanced project portfolio. To this extent, the chapter discusses strategic importance of project selection and the role of risks and uncertainties in project portfolio management and presents some fundamental and innovative frameworks and project selection methodologies for balancing risks. Finally, the chapter proposes a model containing an innovative methodology, based on artificial neural networks, to help managers in balancing project portfolio and assessing projects during the selection phase on the basis of risks, uncertainties and critical success factors.
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The main objectives of the project portfolio management are the identification, the ranking, the prioritization, the selection and the authorization of projects or programs. Project selection is a strategic process aimed at evaluating individual projects or groups of projects and then choosing which implement so that the objectives of the parent organization are achieved (Meredith et al., 2015). However, too often it fails (Ghapanchi et al., 2012) due to complexity caused by many factors, exogenous and endogenous, such as uncertainty, interrelationships among projects, changes over time and stakeholders behaviour.

Project portfolio selection is the result of multiple and conflicting objectives. The first challenge in managing project portfolio is translate qualitative objectives in measurable and manageable quantitative goals. The second is to identify the interdependence of projects driven by common objectives and often scarce resources. The third is managing risk and uncertainties while balancing revenues and investments, reaching the so-called ambidexterity, i.e. exploitation of consolidated products/services and standardized processes vs. exploration of new business opportunities.

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